No One Wants to Talk About the Oversupply of Scotch and Bourbon
The story of whiskey for the last 20 years has been nothing but positive. After decades of declining sales in the late 20th century, established whiskey categories like Scotch, bourbon, and Irish whiskey underwent a renaissance. Simultaneously, new whiskey styles emerged, from American craft distillers to single malt makers in far-flung destinations across the globe. Whiskey’s popularity and visibility have climbed steadily, so that in 2025, it’s completely normal to see an Official Bourbon of the New York Mets or a bottle of Dewar’s pop up on “The White Lotus.” And let’s not overlook the slew of celebrities who have linked their name and fame to whiskey brands.
But even the most vibrant trends eventually hit a plateau, and that includes whiskey. The thing that makes it different from other consumer goods, like sneakers or watches, though, is that whiskey can’t respond to market trends instantaneously. The time it takes to mature means that supply and demand are almost always mismatched.
If a rise in demand lasts long enough and follows a steady pattern, distillers can align supply for a time. But if demand shoots up quickly, supply will lag behind. And if sales start to flatten — or, worse, decline — an excess starts to form.
Across the industry, a pool of surplus whiskey is growing. This has happened before, and examples from history may hint at some of the consequences. But what happens next is an open question. It depends on how distilleries respond, what consumer trends develop, whether the economy stays healthy, and many other factors.
A Surplus of Scotch
Scotland has seen a number of gluts over the centuries, most recently in the 1980s when the so-called “whisky loch” led to the closure of dozens of distilleries. It took the industry years to correct, and it wasn’t until the early 2000s when Scotch whisky production — in particular, single malt — started sustaining positive growth amid booming demand, fueled in part by the well-aged stocks that had lain dormant since the crash. Excited by the upturn, in the first decade and a half of the 21st century, single malt distilleries invested heavily in laying down casks. Many distilleries expanded, and the biggest players, like Macallan, Glenlivet, and Glenfiddich, sank millions of pounds into new construction, doubling or even tripling their production volumes.
For a while, this looked like a smart move: Scotch whisky sales were going gangbusters, straining supplies of aged stock and leading many brands to manage the mismatch by dropping age statements, raising prices — or both. And that helped obscure some of the nuances of rising demand over time: namely that, as single malt whisky prices went up, so did the value of overall sales, even as sales volumes rose more slowly and then began to flatten and, eventually, decline.
But was the industry paying attention? Many distilleries continued to sink resources into making more single malt whisky than ever before in history, counting on future sales. David Stirk, a Scotch consultant and author of several books, says that the biggest sign of the increasing supply is warehousing.
“The number of warehouses that have gone up in the last 10, 15 years is exponential,” he says, explicitly noting that these structures are for single malt, but that single malt sales volume hasn’t matched pace. “The malt side doesn’t need much more product; it just needs to continue as it was,” he explains, nodding to the high prices of the sector. “Macallan, who built a new distillery, haven’t seen a huge growth in sales of bottled whisky; they’ve just seen a huge growth in their profit. When you put those things together, it doesn’t add up.”
The Scotch Whisky Association (SWA) shares export figures annually. For several years, Michael Kravitz of the Diving for Pearls blog published an excellent analysis of this data, predicting in 2017: “If volume sales don’t increase [significantly], then we’re going to start seeing A TON of well-aged malt whisky within 5 years. If this continues further, there is going to be an embarrassment of oversupply in 10 years. Even if industry-wide production is cut in half in 2017, it would be too late to stop The Loch.”
“It’s like the California gold rush. One person found gold, everyone ran west, staked their claims, leveraged everything they had thinking they would be the next one to get filthy stinking rich, and it didn’t happen.”
And another whisky loch, according to Stirk, is what people in the Scotch industry are now talking about. (There are even ominous echoes of the 1980s to point to: In January, Brown-Forman implemented an extended silent period for Glenglassaugh Distillery and laid off staff, though the company stopped short of calling it a closure.) While at one time its published data was highly detailed, the SWA has pared back what it shares publicly, so it’s no longer possible to do an analysis at the same level as Kravitz. But even with the little information available, it’s possible to conclude that there’s far more single malt sitting in cask than is being sold. Scotch volume sales in the U.S., by far the biggest market for single malt, have remained mostly stagnant for a decade, and have dropped for the last four years. And in 2024, Scotch export values overall dropped by 3.7 percent, while volumes rose 3.9 percent — an indicator that drinkers are choosing cheaper products, like blends, over spendier single malt.
Stirk compares the current phenomenon to the petroleum industry. “If oil hits $500 a barrel but consumption is the same, the OPEC countries don’t start suddenly churning out more oil,” he explains. “Laying down all this stock and not having the growth in consumption doesn’t make sense. The profit side of it is all well and good, but if you’ve got too much stock, you’ve got to do something with it.”
Bourbon Bonanza
Bourbon’s 21st-century rise came several years after Scotch’s big surge, and so, too, has flattening demand. That’s an important difference to keep in mind; for bourbon, a sales slowdown has only shown up in the data in the last couple of years. If it holds, it will exacerbate any oversupply problems, but the two issues were, until recently, distinctly separate.
The signs of oversupply are easy to see, though. MGP, one of the largest suppliers of contract whiskey in the United States, has seen such a drop in client demand that last November it announced it would reduce production to focus on its own brands, which make up a small fraction of the business. The company’s gross profits declined by 68 percent in 2024. Even some big conglomerates’ distilleries are pausing or adjusting production, like Diageo, which instituted a months-long shutdown of its Lebanon, Ky., distillery — which only opened in 2021 — this spring. (An informal survey of other leading Kentucky distilleries yielded few answers about current production levels, with most respondents declining to share information.)
The contract whiskey market provides a clear window into the dynamics currently at play. Prices for barrels of aged bourbon, as well as new make, have dropped tremendously. Barrel Hub is a brokerage site that connects barrel sellers and buyers, whose parent company, Advanced Spirits, started in 2022, when the prices for 4-year-old Kentucky bourbon averaged around $4,000 a barrel, according to president Rob Arnold. Now, he says, “it’s really transitioned to where there’s a lot of really well-made whiskey available in the 6- to 8-year range and prices have corrected to a healthy level. You can now find 8-year Kentucky bourbon in the $2,200–$2,500 range.” Four-year-old bourbon, meanwhile, can be found for as little as $1,200 a barrel.
In the last 10 years, quite a few distilleries have been built with contract production baked into the business model. On paper, it’s a solid business plan for a new distillery: Sell some of your capacity to other brands, called non-distiller producers (NDPs), to bring cash in the door while your own product ages. Distilleries like Wilderness Trail, New Riff, and Green River successfully implemented this model, thanks in part to good timing. When these places began distilling back in 2012, 2014, and 2016, respectively, the options for contract production were limited, and there was a growing cohort of newcomers to the bourbon industry looking to start their own brands — or to lay down barrels as an investment, often with limited understanding of the forces that shape whiskey value.
“It’s like the California gold rush. One person found gold, everyone ran west, staked their claims, leveraged everything they had thinking they would be the next one to get filthy stinking rich, and it didn’t happen,” says Dixon Dedman, who has been in the business of buying and blending barrels for well over a decade as the founder of Kentucky Owl and 2XO. “Some people fabricated the upcoming demand for all these speculative/investment/contract barrels, as if there would be this insatiable demand for 4-year-old bourbon at four times the cost of producing it, and too many people took the bait.”
“If you have the vision and stomach for it, there’s a real opportunity to acquire some barrels at a great price that are likely going to be very valuable one day.”
The investor barrel phenomenon helped fuel demand for contract whiskey, leading even more distilleries to start up with the expectation that they would be able to sustain themselves financially with client business — but actually, as each successive one opened, diluting the potential customer base. At the same time, the influx of speculative barrel fills fed into the market’s overall supply. Many investors who bought thousands of barrels of new make a few years ago didn’t have a plan for them to form the base of a new brand; they just wanted to sell them when they came of age. But brand-owning NDPs have increasingly more choice from all corners of the contract and brokered barrel market.
Now, some of the contract-driven distilleries that recently opened have closed, like Garrard County Distilling Company, which shuttered in April with hundreds of thousands of dollars in unpaid property taxes and a $28 million debt. Others that were announced are on pause, such as Blue Run, whose eye-catching distillery was supposed to open this year but hasn’t begun construction yet. Even well-established players are adjusting their businesses to accommodate the current market. Green River, for example, slashed its workforce by one- quarter in March, and reports from other distilleries indicate reduced client demand and ability to pay are spurring modified production schedules.
Even with the industry moving to mitigate its current supply-demand mismatch, fallout is inevitable. A report from Bernstein last year sketched out potential scenarios for bourbon at 2022’s supply levels of 12.6 million barrels, concluding that even if demand rose by 9 percent, the industry would still have an oversupply of 480,000 barrels by 2028. Given that sales are slowing, the deficit is going to be much bigger.
It could spell serious trouble for some whiskey makers, though not all. Most of the big distilleries aren’t willing to discuss current production or inventory numbers, but they’re almost assuredly not at risk of closure, even if they have an oversupply problem. The leading players are well financed and diversified; they can spread the hurt around, and afford to sit on barrels — or potentially sell at a loss — until demand regulates. Some of them may even have seen the slowdown coming and anticipated building in a pause to mitigate its effects.
“If export markets are not traditional bourbon markets or whiskey markets, or they’re dominated by Scotch, yes, there’s an opportunity. But there’s a massive opportunity cost as well. It’s not like flipping a light switch on.”
NDPs with good financing and iron guts will probably also weather this moment fairly well. “The cost of liquid is probably at a deeper than 50 percent discount of what it was a few years ago,” Dedman says. “If you have the vision and stomach for it, there’s a real opportunity to acquire some barrels at a great price that are likely going to be very valuable one day.”
Irish Exception
In Ireland, the picture is different, and arguably more optimistic. The country’s biggest whiskey maker, Irish Distillers, took an extended break period this spring and also paused construction on its latest expansion at Midleton Distillery. Two of the next biggest distilleries — Great Northern and Bushmills — also scaled back their production levels of late, as did the massive Tullamore plant. These could be signs of an oversupply, but may just be smart business: proactively adjusting production to avoid a future glut. In the case of Great Northern, which exclusively supplies whiskey under contract, the move may be helping to keep prices high for what’s currently in barrel.
That issue, in fact, is one of the most serious facing Irish whiskey, says Louise McGuane, blender and founder of the J.J. Corry brand, who also notes that energy prices are constraining production at smaller Irish distilleries and holding them back from competing more aggressively. Even though the Irish whiskey industry has seen massive growth over the last decade, “that explosion was just a market correction,” according to McGuane.
“We had an undersupply for a long period of time, severely,” she explains. The 20th century saw sustained downturns for Irish whiskey, to the point that by the mid-1970s, there were just two distilleries in operation, barely making anything. Decades later, a revival has swept through Ireland and now there are some 50 distilleries making whiskey. But McGuane notes that “the engine hasn’t fully revved up.”
Add in the current climate of economic uncertainty due to the Trump administration’s whiplash tariffs, and moving volume in new markets looks even more dubious — as does moving volume in existing markets, for that matter.
“Talk to me again in about two years and we’ll see,” she says. “All the prices have done is rise in the last decade, including for new make. But that could be artificial.”
Question Marks
Although sales volume is the most significant factor impacting oversupply, there are other forces at play that could move the needle in one direction or another. Both the Scotch and bourbon industries have long pointed to emerging markets like China, India, and Brazil as potential gold mines for whiskey sales. But the volumes of bottled single malt and Kentucky bourbon sold in these places are still modest to minute, and building up sustained, heavy demand will take years, if it’s even possible at all.
“Starting and building a brand in the U.S. is really, really hard. Even if you have all the money in the world, it’s still a significant challenge,” Dedman says. “If export markets are not traditional bourbon markets or whiskey markets, or they’re dominated by Scotch, yes, there’s an opportunity. But there’s a massive opportunity cost as well. It’s not like flipping a light switch on.”
Add in the current climate of economic uncertainty due to the Trump administration’s whiplash tariffs, and moving volume in new markets looks even more dubious — as does moving volume in existing markets, for that matter. Not to mention that the retail sector is increasingly challenging, as sluggish sales mean that stores are tight on shelf space, compounding attempts by brands to offload stock through new product introductions. And prices have never been higher, right when consumers are becoming more discerning about how they spend their money.
But it’s not all doom and gloom. Some distilleries are bullish and laying down more whiskey than ever before. Wild Turkey, which recently reintroduced its 8-year-old 101 bourbon to the U.S. market after a multi-decade absence, is in the midst of a $161 million dollar expansion that will bring production capacity from 9 million to 14 million proof gallons. Heaven Hill just opened the Heaven Hill Springs Distillery, a companion to its existing plant, which has a capacity of up to 450,000 barrels. And Buffalo Trace is about to complete a decade-long, $1.2 billion expansion, which has brought capacity from 200,000 to 500,000 barrels a year.
Many new contract distilleries are also staying the course. Potter Jane Distilling Company, opened by Maker’s Mark veterans Denny Potter and Jane Bowie, is up and running and filling barrels. Eastern Light Distilling, dedicated to custom contract work, is on schedule to open in early 2026. And Whiskey House of Kentucky, a 7 million-proof-gallon facility purpose-built for contract production of branded — not investment — barrels, which opened last July, is at 90 percent production capacity with plans to expand, on target with its goals, according to CEO David Mandell.
But even if individual businesses have a solid plan for success, there’s still a lot of whiskey maturing in warehouses right now — 14.3 million barrels in Kentucky and 22 million in Scotland, at last count. What becomes of the portion that doesn’t find a home in a drinker’s stash? It could end up being sold cheaply as bulk spirit and used in local blends in places like India. It could become part of a successful new RTD, one of the few spirits segments that’s still seeing dynamic growth. Or it could end up sitting there for years, getting older and older, perhaps eventually seeding a new generation’s discovery of the joys of whiskey.
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